Australia’s Fevered Streaming Market Isn’t Waiting for Netflix

Australia is an odd market for entertainment. English-language fans of Hollywood content abound in densely populated major cities. But pay-TV penetration is a measly 30%, and the modest broadband infrastructure is overrun by piracy.

But what may be odder still Down Under is the sudden surge of streaming-content providers seemingly intent on competing with Netflix, which hasn’t arrived yet in the territory — sort of.

Just last week came the launch of Presto, a $19.99 movie service from Foxtel, Australia’s pre-eminent multichannel TV and broadband provider. Despite Foxtel’s core video business, Presto offers a standalone bundle of linear channels and VOD that doesn’t require a pay-TV subscription.

The launch hasn’t come a moment too soon, considering reports that two big Australian media companies, Seven West Media and Hoyts Group, are in talks to team up for their own subscription VOD play. Then there’s word that a consortium of companies linked to Virgin Group chief Richard Branson is mulling entry into the market, as well as any other promising territory where Netflix has yet to expand.

But if Robert Thomson, CEO of News Corp. — which co-owns Foxtel with Telstra — was concerned about competition, he seemed to have a bigger worry his mind in an appearance at an investor conference March 11 in Florida. “The only problem you have in Australia is there’s a significant amount of piracy,” he warned.

That’s particularly problematic for Stephen Langsford, CEO of the small Australian SVOD service Quickflix. He visited the West Coast last week in part to share with the Hollywood studios a troubling allegation: Netflix technically may not in Australia yet, but a large enough audience has been illegally accessing the U.S. version of the streaming giant’s programming that it was not only hurting his own business but depriving media companies of additional revenues that would come from selling content rights in the market.

“Netflix is enjoying a free ride, and the studios should be very concerned about that,” Langsford maintained.

A Netflix spokesman begged to differ. “Because of licensing restrictions, we employ industry-standard measures to prevent cross-border usage of Netflix,” he said. “The use of technology to virtually cross borders and use Netflix in another country violates our terms of use.”

Any way you slice it, all these streaming services are counting on Australia’s broadband infrastructure to improve. The country’s government approved
an ambitious buildout known as the National Broadband Network, but only about 300,000 homes have been upgraded so far. That hasn’t deterred market entrants. Google Play launched in Australia last week, and coming in May is Freeview Plus, a broadcast-online hybrid catchup service from the nation’s top broadcasters. One of them, Nine, is already testing its own SVOD service.

Cynics could argue Netflix’s best move is to stay out of Australia for now and just inflate its U.S. numbers via a black market diaspora. As for why the U.S. giant isn’t already Down Under, Jonathan Wilner, VP of products at Ooyala, the video-streaming specialist powering Presto, has a theory: “The challenge for Netflix is that Foxtel has all the good movies locked up,” he said.

Yet there’s another unexpected entity that’s already a part of the Australian streaming landscape: HBO. The Netflix rival owns 8% of Quickflix, and much of its content ends up on the service, though not before hitting the pay TV window, where an output deal steers shows like “Game of Thrones” first to — wait for it — Foxtel. Quickflix is not exactly a priority investment, according to an HBO insider.

Next month marks the new season of “Thrones,” which has the distinction of being the most pirated TV series in Australia. While Foxtel has in-season rights to the series in its pay TV package, episodes won’t be available to stream until after the finale. It’s a sure bet pirates won’t be waiting until then.

What no one seems to address or bother to understand for the most part with piracy in Australia is the actual access to content and the price.
Be it Government, Apple, Movie Studios, Foxtel, etc they just cant seem to wrap their heads around that.
Im not saying it would wipe piracy out, nothing ever will, but it would be a good start.
The full price for everything on Foxtel is $124 a month or around $29 a week. Most Americans would probably fall over at that price as its absolutely ridiculous.
And it comes loaded with a ridiculous amount of commercials. A lot of people see it as overpriced and not enough value for money.
To have access to Game of Thrones Australians will now have to pay $74 a month ($18 a week) to watch it on Foxtel for 2 and hal months for the full series once it starts in April. People just arent going to pay that for one show. Thats just an example and thats what its like here. And thats the cheap option!
I know a lot of people who have Netflix here and why wouldnt they want it? Commercial free, access to an amazing amount of content, cheap, original content, etc.
Until access to content the day it airs in the US is available (and to be fair quiet a few shows already are on Commercial networks for free) and that its kept at a reasonable price Aussies are going to continue to download content illegally.
It would be great if our Government would actually tackle the access to content and price inequality problems compared to other countries but it just wont happen.

The national broadband network isn’t being built due to new government being elected. Our country is going backwards, Murdoch owns most of our media and are in bed with the new federal government. Tony Abbott will do anything to protect Ruperts interests.